India: New investments improve in FY15 Although still in a nascent stage, they are moving in the right direction :: Nomura Research

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 According to the Centre for Monitoring the Indian Economy

(CMIE), new investment projects announced rose to 7.9%

of GDP in FY15 (year ending March 2015), better than the

average of 5% in FY13-FY14 but still subdued compared

with the FY06-FY10 period.

 The internals were encouraging. In FY15, the share of

private sector in total new investment rose to 53% from

47%. Among the sectors, power (33%), transport services

(29%) and metal & metal products (10%) were the largest

contributors of new investments. Meanwhile, stalled

projects declined, while investment projects revived rose

sharply.

 For a sustainable growth recovery, investments need to

revive. The CMIE data show that new investments are still

in a nascent stage of recovery but are moving in the right

direction. As the often-cited capex problems such as raw

material supply bottlenecks and land acquisition issues are

resolved, we expect a gradual pickup in investment - a key

determinant of potential growth - over the course of FY16

and FY17.